Bitcoin Forum

We see reports of police and experts "analyzing the blockchain", usually related to thefts or investigations of some sort.
Does it really take significant skill to "analyze the blockchain" or perhaps it's that human tendency to over-complicate things so 'experts' can (for example) create new income opportunities and consulting businesses?

In general, do you think it takes significant skill to "analyze the blockchain"?

As far as I know, analyzing the block chain consists of tracing transactions to see if those transactions match up with what is believe to have happened. Example: If we hear that person A stole 5000 bitcoins then there must be a transfer of 5000 bitcoins somewhere in the blockchain, and since those transactions do not happen often, it should be easy to locate... I think.

The blockchain is as transparent as it can be. An expert would be someone who fully understands the bitcoin protocol its inputs outputs address and hashes. So the gov would basically hire a bitcoin fan miner programmer to do the "analisis"

Maria

Yes, I think it has mostly to do with tracking transactions, so understanding how bitcoins move and its unputs/outputs would be important.

No it just takes time and is tidious if done by hand. The "expert" probably comes into play when you try to automate the process or need educated guesses as with CoinJoin transactions.

Can anyone tell me who is going to be insane enough to try to trace back someone's coin that went after say, one or two exchange withdrawals plus a mixer? How are you supposed to effectively trace the origin back? too many variables.

It all depends on what you are trying to do.

If you just want to identify what address a particular bitcoin transaction was sent to, then no. There's no skill needed.

On the other hand, if you are attempting to use forensic accounting practices to identify a series of transactions that were all sent to or from a particular person or business after that person or business attempted to hide their activity with "mixers" or various "mixing" techniques, then yes.  There is a significant amount of skill and education needed.

It's a pretty blurry thing, I believe. You are already 'analyzing the blockchain' when you're following some coins you sent to new recipients. You could also count the number of addresses that have more than 1 BTC in them. But you could also go and use sophisticated algorithms in order to find out certain distributions or determine to what probability some coins are connected to a certain address.

Neat, this seems like kinda of a decryption tactic, where you analyze letter frequency to break the encryption. Is this something similar in the block chain, where you analyze transaction frequencies to find irregularities?

It takes no much skills. It takes basic knowledge, patience, commitement and high IQ.
I done myself countless blockchain forensics with very good outcome in several incidents where alts were stolen without a lot of prior knowledge. A good blockexplorer is what you need.

it takes year to follow all deviation of BTC flux ... i prefer the blockchain data + coded program to create a tree (with request) from a base like a Tx or Addr.

Umm, well it depends on what you're trying to accomplish with your analysis, I guess... Analysing patterns makes only sense if you're looking for something unknown or try to find something you suspect is there, but don't quite know how to identify or quantify it. Other analysis may just consist of following the addresses coins "travel"...

Considering most every one of these people on here get it wrong 100% of the time, I'll have to say nope, no skills involved in the analysis of bitcoin markets...

Yes, the users on this forum have generally much more skills than the average Joe who only knows internet explorer and youtube. From our perspective it may not be a big deal, but some of us are the kind of people who created bitcoin in the first place ;)

Adding on to what Danny said, other things you can do with little skill is to link various address together with a good amount of certainty (especially when addresses are reused). You would also be able to tell what the "balance" (sum of the value of all unspent inputs) of an address is as of any given time, (and to an extent with a wallet with a fair amount of certainty - provided that you can reasonably link addresses in a wallet together)

it depend also on who, you want to analize, the address of an users that is truly ramificated in an hard way, could be difficult to unmask

otherwise it is only a thing that require some time nothing else, pretty straightforward

I think most sophisticated analyses of the blockchain would fundamentally be probability based.

Lets say a crime is under investigation, and one wants to find out who is behind a certain transaction, or alternatively, to find which transaction a known person is behind if one already suspects a certain person. Then combining known "meatspace" data with blockchain data, one can compute probabilities for different scenarios. For example is one suspects that a transaction has taken place in a certain time interval and that the transaction has a certain size, one can reduce the number of suspected transactions on the blockchain, and in the process one gets a more "spiky" probability distribution concentrated on those transactions.

Also, lets say one wants to find out to who bitcoin from a known address has been sent. It is impossible to know if bitcoin is sent to another person or if the person has sent it to himself using a new address.  However if coupled with meatspace data and/or the probability that people actually sent bitcoins to themselves some information could be gathered (gaining information is equivalent to changing probability distribution to a more "spiky" one roughly speaking)

The "perfect" cryptocurrency blockchain would be one where no additional information could be gathered from it. Or stated in conditional probabilities:

Prob(hypothesis | meatspace data and blockchain data) = Prob(hypothesis | meatspace data)

There is a thread where this is elaborated upon:

https://bitcointalk.org/index.php?topic=1011959.msg10978620

Altough if they are using mixer, do they have a chance to track it out since bitcoin mixer is always generate their address? Is there any connection between the bitcoin mixer and our address that might trigger the real address to be found?

Aren't there no "from" addresses in btc? Is it possible to track btc still?

There are no addresses in bitcoin at all.

Addresses are something that we humans use to make it easier to share the data with each other that the wallet software needs for building transactions.

At the protocol level (in the blockchain), all that exist are inputs and outputs.  Each input is a previously spent output, and the blockchain sets the consensus on the order of the transactions.

Therefore it is possible to "track" which outputs were used as inputs when building a transaction and which new unspent outputs were created.

The blockchain is a big database. All the data is in there, it's like a maze. I think forensics needs to develop tools to dig evidence, to find where the coins went after passing through a mixer. It is not a simple task.

There are what I usually name "from" addresses and change addresses. A typical bitcoin transaction can look like this:

https://blockchain.info/tx/72e3dd987cc0cc31def333577e7539b85687d90db922698c08f5d4fef9bb9ade

Here we have, I think, one "from" address and two "to" addresses one of which is (probably?) a change address, i.e. an address that belongs to the sender, so the sender sends the "change" back to itself.

Edit: It this case it appears that the change address is the same as the sender address. Guess it depends on the wallet software which practices are used.

You are mistaken.

What you linked to is NOT what a bitcoin transaction looks like at all.

That is an interpretation of a bitcoin transaction from a website named "blockchain.info".  Many of their "interpretations" are completely invalid.

The transaction that you linked to ACTUALLY looks like this:



Broken down into its parts that's...

VERSION:

QTY OF INPUTS:

INPUT 1:

QTY OF OUTPUTS:

VALUE OF OUTPUT 1 (11363300 satoshis encoded in Hex):

OUTPUT 1 SCRIPT:


VALUE OF OUTPUT 2 (544181 satoshis encoded in Hex):

OUTPUT 2 SCRIPT:

Please show me in that actual transaction where you see a "from address" (or any address at all).

Does this mean that the addresses cannot be deterministically computed from the above transaction data?

That depends on what you are trying to accomplish, why you are trying to accomplish it, and what additional information you are willing to access to "determine an address".

Usually when someone is looking for a "from address" they are misunderstanding how bitcoins works and attempting to do something that will result in confusion, lost bitcoins, frustrated users, and generally a mess that can be avoided by doing things properly.

People have created tools like https://bitiodine.net/ and they're helping do some detective work. However, it's hard to associate bitcoin addresses with real-world names. What's even harder is to know at what point bitcoins trafficked from address to address could have changed ownership.

I admit that I'm often mistaken, but aren't those "inputs" and "outputs" public keys corresponding to private keys that can be used to sign transactions?  And there's a 1-1 mapping between keys and addresses (right?).  So, in some sense, aren't those inputs and outputs in correspondence with addresses?

No.

The outputs contain a script, and these scripts in this transaction do contain a hash of a public key, but an output isn't required to have a hash of a public key, or it could contain the hash of multiple public keys.  Even if it does contain the hash of a public key, it may not be a P2PKH script or a P2SH script, in which case there is no valid address that the output script could be represented as.

The inputs contain the necessary data to satisfy the script in the previously unspent output that is being spent.  In the transaction presented, the script that is being satisfied did require a public key, so the input does contain a public key, but other scripts in other transactions may require multiple public keys, or no public keys at all.

Thanks for the education!  So, is it fair to say that an output is always always associated with 1 or more addresses (either through a hash of a public key, or a hash of multiple private keys)?   I have to admit, I don't fully understand the case where there's "no valid address that the output script could be represented as" except under the case where this is true because of a payment to a multisignature conjunction of addresses.  Please forgive my ignorance.


Again, can you help me understand the "none at all" case?

No.

An output is associated with a script.  That script may, or may have any of (or none of) a one or more public keys, one or more public key hashes.


A script encumbers the output with some requirement that must be met in order to use that output as an input to a new transaction.  There are a couple of very common scripts (P2PKH and P2SH) that have been defined and given a version number.  This defined "script version" allows the entire script to be represented with its version and its data.  In thses common scripts the data is a hash (a public key hash in the case of P2PKH, and a script hash in the case of P2SH)  The version, hash, and a checksum are then encoded as an "address".

However, it is possible to create scripts other than these common script types. It is also possible to create scripts that do not contain a hash or a public key at all. In that case, there is no recognized version number that represents the script and therefore no agreed way to represent the output as an address.


As a simple example take a look at this transaction:
https://blockchain.info/tx/8bae12b5f4c088d940733dcd1455efc6a3a69cf9340e17a981286d3778615684

There are two outputs.

One was sent to: 1HnhWpkMHMjgt167kvgcPyurMmsCQ2WPgg

The other was sent to an output that has no representable address.

I see.  Thanks for turning up that example.  So, I think you're emphasizing that because the output is a script the script coulde be malformed, unconventional, etc and therefore no output address(es) could be found for that.  Are all of these cases unspendable bitcoins?  How can someone satisify the requirements to spend the bitcoins sent to that output which is not representatble as an address?

EDIT: Actually, heh, maybe a total of zero satoshis sent to the unrepresentable-as-address output doesn't provide a good situation for your to explain how they could be spent.  But if that had been a non-zero output to that unrepresentable-as-address output, could it be spent?

That's how I found that Josh Zerlan of BFL (BF Labs Inc./Butterfly Labs) was trading back and forth in Pirate's Ponzi scheme, and at the same time calling out others as criminals for trading with a criminal, namely Trendon Shavers.

No, they are not all unspendable, some are.  Some aren't.  The one I provided as an example is not spendable.  It was just the fastest and easiest type for me to find an example of.  There are other types that are spendable.


"That output" cannot be spent.  There is no scriptSig that can be provided in an input that will satisfy that particular script


Correct.  That was only intended as an example of how outputs don't have to be encode-able as addresses.  That particular output uses a single output script command (OP_RETURN)  followed by arbitrary data.


No, that particular output is unspendable.  It was only intended as an example of how transaction outputs that the network considers "valid" aren't always encode-able as addresses.  There are other output scripts that can be spent, but which cannot be encoded as addresses.

Here's an example of an output that is spendable (and was spent) that cannot be encoded as any of the standard address formats:
https://blockchain.info/tx/b8fd633e7713a43d5ac87266adc78444669b987a56b3a65fb92d58c2c4b0e84d

Got it.  I see clearly in blockchain.info that they've choked on that 0.03 output.  Can you reasonably easily let me know what's going on with this one (since it's not an unspendable output AND it's not encodable as an address (or as a series of addresses, ie, a multisig requirement))?

Thanks again, sincerely, for helping me/us learn about this.  I'm pushing back on you a bit here because I have often seen posts from the more technically informed saying "there are no addresses!!!", but I'm not convinced that they are entirely halluncinated artifacts.  I'm thinking that people are saying "there are no addresses" with such finality because they're trying to emphasize a point which is going to help newbies or those who don't have time to understand the subtleties.  However, for those of us who are curious about the actual state of affairs, I'm just trying to squeeze you for a few more details.  Thanks again!

Also, do you happen to have the list of the script codes which can be in a valid output (or know where to find it on a web-page, or in the source code for bitcoin-core)? Perhaps that page would answer my questions without you haveing to write to me so much :)

+2 for getting my brain active.
This old thread is still valid, and/or certainly competes well with the more modern ones?

i really don't think analyzing blockchain takes any special skill. Blockchain is very easy and simple to understand. Just do a little research as there are lots of books, articles and publications about blockchain that will help give you a good knowledge about blockchain.

no significant skill is needed to analyze the blockchain. Once you can read and understand, it simple. People think blockchain is complex to analyze and understand but it is not.

To an extent it does take some still to be able to analyse blockchain. Skill in the sense that you must be knowledgeable about blockchain to actually be able to analyse, through reading or taking blockchain courses.

Blockchain is a very high technology that requires a certain understanding to be able to analyze and apply it in practice.

The blockchain technology is quite new and except you have link or connection to it. It might be difficult to get a hand of it. But it's not really very complicated

Well for me, there is no need for a significant skill to analyze the blockchain. What people need to have is patience and hardwork as well as interest to know more, understand and keep digging in the world of blockchain technologies.

no its not new anymore  . its been a couple of years already since blockchain discovered  but i disagree when when you said its not complicated . blockchain technology is verry complicated  . you must first learn how to become a developer or a coder before you advance on this scene  .


your patience and hardwork will be useless if you dont learn the skill to know more about the blockchain tech . skill is what we need the most to be able to understand hard stuffs not just on blockchain technology .

Yes , one needs a skill in the area of blockchain to be able to analyze blockchain technology effectively.
Blockchain technology is a field on it's own class , some of the terms used in this space are even complicated and so , it's not possible for one who has not mastered this terms and have basic skills about blockchain to be able to analyze it.